SEOUL (Yonhap) -- North Korea demanded a four-fold increase in wages for its workers and a 30-fold raise in rent at a South Korean-run industrial park during talks held at the North's border city of Kaesong on June 11, officials said, casting darker shadows on the future of the last-remaining inter-Korean venture.

However, Pyongyang did leave room for negotiation, Unification Ministry officials said, as the two sides agreed to meet again on June 19.

"Judging from the amount of the money it is asking, North Korea may seem like it is telling (South Korean firms) to leave," Kim Young-tak, senior representative for inter-Korean dialogue at the Unification Ministry, said in a briefing after returning from the talks.

"But I can tell you for sure that there was no such request (to leave)," Kim, who led the South's 14-member delegation, said. "We believe the two sides will reach an agreement through a long negotiating process starting today."

The rare talks came amid growing tensions on the peninsula. North Korea has warned of naval clashes on the Yellow Sea border with the South and was sharpening its confrontation with the U.N. Security Council, which is expected to slap new financial and diplomatic sanctions on Pyongyang for its recent nuclear test.

Further complicating the situation, North Korea has been holding a South Korean worker since March, accusing him of criticizing its political system.

North Korea still gave no promise about the Hyundai Asan employee, identified only by his surname Yu, only saying he is "doing well without any problem," Kim explained.

"Our government will put priority on the early release of our worker and safety issues as we proceed with the negotiations with the North," he said.

Pyongyang demanded South Korean firms raise their average monthly wages for North Korean workers to US$300 from the current $70-$80 and guarantee an annual wage increase of 10-20 percent from the current 5 percent, Seoul officials said. South Korean firms paid about $26 million in wages to the North Korean government last year.

North Korea also told the South to increase the rent for the joint park to $500 million. South Korean developers, Hyundai Asan and the state-run Korea Land Corp., paid $16 million when the park opened in 2004 for their right to develop the joint park over the next 50 years.

North Korean state media said such demands aim to establish a "normal footing" on the joint park.

Inter-Korean relations "have reached the phase of catastrophe," and the joint venture "was thrown into a serious crisis," the (North) Korean Central News Agency quoted the North Korean delegation to the talks as saying.

North Korea has "no reason for keeping any longer the preferential measures" for South Korea while historic summit accords that gave birth to the park are "totally negated" by the Seoul government, it said.

The Kaesong venture, just an hour's drive from Seoul, is the last surviving inter-Korean economic project to come out of the 2000 inter-Korean summit. Other joint ventures, including booming tour projects to North Korean scenic resorts, were suspended last year as political relations unraveled under the conservative Lee Myung-bak government in Seoul.

The park hosts 106 South Korean firms producing clothing, kitchenware, electronic equipment and other labor-intensive goods. More than 40,000 North Koreans work there.

North Korea's new demands deepened already serious concerns about the joint park. A fur clothing company, Skin Net, said this week it will close its factory in Kaesong by the end of this month, the first withdrawal by a South Korean firm from the joint venture.

Ok Sung-seok, chief of Nine Mode Co., a clothing company with about 300 North Korean workers, said he believes the $300 wage demand will not be the end result, and that North Korea will back down in the next talks.

"North Korea was not saying, 'take it or leave it.' It set up the next talks, and I believe there's room for negotiation, and there will be an agreement that we can accept," Ok said.

South Korean companies operating at an inter-Korean industrial complex rejected on June 12 demands by North Korean workers to quadruple wages for the North's workers there.

"We can not accept North Korea's unilateral demands," the Corporate Association of Kaesong Industrial Complex, a lobby group of about 100 South Korean firms operating there, said in a statement.

The South Korean companies at Kaesong have incurred "unbearable losses for a long time" because of heightened inter-Korean tensions, the statement said.

They called for the South Korean government to offer financial assistance to minimize their losses, according to the statement.

At an earlier contact in April, North Korea unilaterally declared that all South Korean firms at the park without exception must accept new wages and land fees set by it and asked those who would not accept them to leave.

It's unclear why North Korea has made such demands, but some South Korean firms there have begun to feel the heat from heightened tensions.

Kim Yong-hyun, a North Korean studies professor at Dongguk University, said North Korea is forcing the South to pay more or give up the joint venture. He said Pyongyang cannot officially push for the closing of the joint park because it was initiated by its leader, Kim Jong-il.

"North Korea wants to say the ball is now in the Lee Myung-bak government's court," he said. "By setting new talks, the North is saying, 'We're doing all we can. It's your responsibility if things go bad.'"

Meanwhile, South Korea will hold talks with North Korea as scheduled on June 19 regarding the park, a spokesman with Seoul's Unification Ministry said on June 15, as diplomatic tensions over Pyongyang's nuclear program escalate.

A South Korean advance team left for the North on June 17 to prepare for upcoming inter-Korean talks over Kaesong, but prospects for any meaningful settlement are low following a stern message from President Lee Myung-bak.

Amid the grim outlook, a four-member advance team from Seoul's Unification Ministry traveled to the industrial park in the North's border town two days ahead of the main talks. The working-level officials will settle procedural matters, such as schedule and facilities, with their North Korean counterparts, said Lee Jong-joo, a ministry spokeswoman.

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Two Koreas Separately Observe Summit Anniversary

SEOUL (Yonhap) - The two Koreas on June 15 had separate meetings to mark the 9th anniversary of the historic first summit between their leaders amid heightened tension.

North Korea held a national meeting in Pyongyang to celebrate the day, attended by ranking officials such as Kim Ki-nam, a secretary of the Workers' Party, and Yang Hyong-sop, vice president of the Presidium of the Supreme People's Assembly and heads of social organizations.

Speaking in the meeting, Yang stressed the need for all Koreans in the two Koreas and overseas to give further momentum to their struggle for preserving and implementing an agreement signed in the summit, according to the North's official Korean Central News Agency (KCNA).

In 2000, then South Korean President Kim Dae-jung held a summit with North Korean leader Kim Jong-il in Pyongyang. They produced a joint declaration that paved the way for the two Koreas to ease military tensions and begin economic cooperation.

The two Koreas' once reconciliatory ties, however, turned sour after South Korea's conservative President Lee Myung-bak took office in February last year and vowed to take a tougher stance on North Korea's nuclear arms ambitions.

Since last December, Pyongyang has increased its belligerence in steps, tightening border crossings and threatening of a military clash in protest at Lee's "confrontational" policy toward the North.

Pyongyang has complained in particular about Lee's refusal to implement large-scale joint economic projects agreed upon in the two summit talks in 2000 and 2007 which require huge capital investment from the South.

"Neither dialogue nor contact would be thinkable nor improved North-South relations could be expected without the implementation of the inter-Korean joint declarations," the KCNA quoted Yang as saying.

He also called on all South Koreans to turn out in an anti-government struggle, claiming Seoul is trying to capitalize on the "security unrest" to remove its own "political crisis," according to other North Korean news media.

Among other attendees of the meeting were Ro Du-chol, a deputy premier of the Cabinet, Kim Yong-dae, head of the Socialist Democratic Party, Ryu Mi-yong, head of the Chondoist Chongu Party, Kang Nung-su, minister of culture, and An Kyong-ho, secretary general of the Committee for the Peaceful Reunification of the Fatherland.

South Korea, in contrast, marked the anniversary in a private and modest way.

The private Kim Dae Jung Peace Center arranged a special lecture in Seoul on June 11 in celebration of the anniversary. Former president Kim, in the lecture, urged North Korean leader Kim Jong-il to return to the six-party denuclearization talks as early as possible to resolve the dispute over the North's nuclear programs.

For the Lee administration, Kim said it should pledge to adhere to the summit declarations. He also urged South Koreans to rise up to defend "peaceful inter-Korean relations."

The event was attended by some 1,100 prominent figures from all walks of life, including opposition party leaders, businessmen and former aides to Kim. But no official representing the current government showed up.

It was followed up by separate ceremonies in Busan, Daegu, Gwangju, Jeonju and other big cities on June 15 by provincial branch offices of "the South Korean side committee for the implementation of the June 15 joint summit declaration." Participants called on their government to faithfully implement the summit accords.

"The Lee Myung-bak administration is maintaining an outspoken policy of pressure and hostility toward the North, rather than promoting inter-Korean unity," a spokesman of the Daegu-South Gyeongsang Provincial regional branch said in one of the events. "We should remove the cloud of war over the Korean Peninsula through the implementation of the June 15 and Oct. 4 declarations," the spokesman said in the Daegu meeting. Seoul's Unification Ministry, in the meantime, accused North Korea on June 14 of negating the June 15 summit agreement in a verbal counterattack against Pyongyang's blame of Seoul for the deteriorated ties.

"North Korea is not abiding by the agreement in the June 15 Joint Declaration," the ministry said in a statement, adding the North Korean leader has yet to keep his promise to make a reciprocal trip to South Korea. "North Korea has also rejected dialogue with South Korea and suspended the reunion of separated families and scaled down inter-Korean exchanges and cooperation," the ministry said.